Collective Health Bets Employers Are Fed Up With Health Expenses

Collective Health Inc., a startup offering tech-savvy tools for managing health benefits, has raised a fresh infusion of investor cash as it seeks to win over more employers fed up with a fragmented, costly market.

The San Francisco-based company, founded in 2013, is betting that growing dissatisfaction with rising health care costs will lure more firms to its technology, which lets employers cut through the tangle of different benefits they typically administer.

To tout its services, Collective Health on Wednesday published a manifesto positioning itself as a part of a “movement” to reshape health care, and has put up billboards on U.S. Route 101 near San Francisco designed to catch the eye of executives stewing over high costs while they sit in traffic.

“Every CEO is in the healthcare business. Take Control,” one says.

The latest fundraising brought in $110 million from investors including Canadian insurer Sun Life Financial Inc. The companies plan to bundle Collective Health’s products with Sun Life’s insurance coverage that helps U.S. employers cap their health costs. To date, Collective Health has raised a total of about $230 million.

Ali Diab, Collective Health’s co-founder and chief executive officer, said he sees increasing frustration with health intermediaries who aren’t doing enough to improve care or lower costs. He said that a planned employee-health venture unveiled by JPMorgan Chase & Co., Berkshire Hathaway Inc. and Amazon.com Inc. is evidence the industry is ripe for change.

“Corporate America is saying enough is enough,” Diab said in an interview. “Employers just don’t feel like they’re getting their money’s worth.”

Monitoring Spending

Collective Health offers employers a web-based platform to monitor spending and results in real time, along with a mobile app that lets workers manage their dental, vision and health benefits. The app also offers features like doctor search, wellness and telehealth. Employers contract with insurers to access their networks of doctors and hospitals, but the companies themselves pay the medical bills.

Collective Health covers 120,000 people across 30 employers, up from 30,000 two years ago.